Global markets sink as uncertainty reigns

London, United Kingdom (AFP) — European markets lost ground yesterday on the back of sharp Asian losses and overnight on Wall Street, as concern grew over the US economic outlook, dealers said.

With Wall Street closed on a US national day of mourning for former president George HW Bush, European stocks tanked as investors pondered problems from trade to Brexit that erased the positive start to the week when sharp gains were made after the US and China appeared ready to dial down their trade war.

After US President Donald Trump and Chinese counterpart Xi Jinping moved to a truce in their trade spat, Trump tweeted that he saw “very strong signals being sent by China”, with Beijing accepting a 90-day deadline to reach a tariffs agreement.

Capital Economics intimated that the two leaders “seem to have different understandings of what they have agreed. But the deal has, at least, paused the escalation of the dispute”.

For Fiona Cincotta, senior market analyst with City Index, “the shock waves from the sharp drop on Wall Street Tuesday continue to reverberate across European markets” as “concerns over global trade are back on the agenda as the fine print on the recent US China deal became apparent, that is that the deal is only valid for the next three months.”

The doubts and the gloom combined to ensure London, Frankfurt and Paris all lost more than one percent on the day as the uncertainty from Britain’s ongoing Brexit saga also continued unabated.